I'd like to know WHY all of the homes are being foreclosed, what's in it for the banks

[DainBramaged]

and mortgage holders? Are they hoping to make a killing when the Country recovers? Is there a nefarious/malicious beneficiary behind the foreclosure of America sucking up the land? Is it he Chinese?? I cannot understand why ANYONE holding a mortgage would rather have an empty, vandalized property rather than a property that at least pays rent. Are these people stupid? Is this just the way it's always been done?

What give????


Opinions????

[EmeraldCityGrl]

1. The banks also need to pay the taxes

and maintenance. Since the banks never are on the losing side, makes you wonder what else is going on.

[DJ13]

4. If banks were paying the appropriate taxes

Would states be running low on tax income?

[EmeraldCityGrl]

10. Property taxes.

I don't think there's any evidence banks aren't paying taxes on foreclosed properties. If they weren't communities would be up in arms over the loss of revenue.
What I don't understand is why they would rather take on that burden. I'm wondering if at some point they expect the government to offer a buyout or some
other such silliness.

[tjwash]

85. Banks are not paying shit for taxes while the house sits.

At least according to every property manager I have talked to. They don't pay a damn thing until the property sells, then hide the past due taxes in the cost of the house, and then pay them AFTER it sells, pretty much making the new sucker-I mean BUYER, pay the past due taxes for them.

[Name removed]

2. Deleted message

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[Name removed]

12. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Cessna Invesco Palin]

20. Hmm...

The Japanese bought BILLIONS of dollars of land in the 80s

You are aware, are you not, that China and Japan are different countries with entirely different economic and sociopolitical structures, yes? And that their economic models have very little in common? I believe such things are taught in most high school geography and social studies classes.

what makes you think the Chinese who have TRILLIONS of our debt aren't doing the same now?

Nothing aside from the fact that there is not a single shred of evidence to back up your assertion.

You've been stalking my ass for ages.

I hardly think that my poking fun at your silly tirades and self-styled online-belligerent-iconoclast persona rises to the level of stalking.

[Name removed]

23. Deleted message

Message removed by moderator. Click here to review the message board rules.

[roguevalley]

58. they may buy it but they can't haul it away. it only is the way it is if

we all agree that the monetary mess we're in and the value and ownership of everything exists. The first person that calls the bluff wins and the rest of us lose.

[Name removed]

78. Deleted message

Message removed by moderator. Click here to review the message board rules.

[JDPriestly]

18. It isn't the Chinese people. It's the Chinese government.

They own the dollar. That means that indirectly they control the banks. Geithner is an expert on the Chinese. He lived there. Whether he is in bed with them or not, I will let you decide. But what is going on right now is in the interests of the Chinese and the oil rich nations, not in our interest.

We are addicted to two drugs: oil and imports from China (and a couple of other countries). Obama's administration is happily allowing us to get as high as we want just like Bush did. Eventually we will simply go into national cardiac arrest or alternatively have a massive brain hemorrhage. Pick your drug. Choose your death.

But for the moment be sure to see Michael Moore's Capitalism: A Love Story. It is bitter, but truthful.

[Cessna Invesco Palin]

39. Please enlighten me...

How is the epidemic of foreclosures in favor of the Chinese? Have you even a single shred of evidence to support this assertion?

[bertman]

45. My take on it is that it favors any group or individuals with the financial resources to

purchase foreclosed properties. Usually those properties can be bought for a fraction of their market value. So, those who have money (who incidentally also are usually the ones who have land) buy the property low, then when the market moves upward they sell high.

I think that Dain Bramaged's argument was that the Chinese HAVE money so they are positioned to take advantage of a very bad turn of events in the U.S.

I agree with him that this could be true. And it's not necessarily JUST the Chinese, but since they are our financial overlords they would be high on the list.

[Cessna Invesco Palin]

63. Jesus Christ, this isn't rocket science.

Either you've got evidence that what you suppose is actually happening, or you don't. If you have evidence, present it. If you don't, then stop throwing around random accusations.

[bertman]

72. True. Not rocket science, but actually monetary/investment science, which to the average

person is equally as difficult to decipher.

The world is no longer a place where a citizen of a foreign country walks into a real estate office in Florida and pays cash for a property. That would make all of this very easy to track. But now everyone works through intermediaries and second, third, and fourth party removed transactions. So, your neighbor who is the CEO of International XYZ Corp might have a subsidiary of Int'l XYZ purchase a block of homes in Tallahassee. But what about the fact that Int'l XYZ and its subsidiaries are owned by subsidiaries of a Dutch Investment Group? I used Dutch so as to not offend your sensibilities about the Chinese, Cessna.

Maybe not rocket science, but definitely not easy to track. And it's done that way intentionally. For lots of reasons--legal and financial and with an eye toward P.R. (public relations).

[JDPriestly]

46. Anything that makes it more difficult for Americans to pay taxes and

support the military is good for China and a number of other countries.

[DainBramaged]

76. Are you accusing me of being a racist? Pot meet kettle.

Put me on ignore unless you are simply looking for a fight, which you usually are. Yo7u do well at trying to get members banned here that don't bow to your BS.

[DJ13]

3. I think its institutionalized stupidity more than anything else

The cubicle rats are programmed to follow a set path when loans go delinquent, and they are unable to think outside the box and renegotiate loans with the needed lower principle and interest rates to keep people in their homes.

I've read reports that the shadow inventory (repo'ed homes not put back on the market) is so high it would take several years to clear them off the books by selling them.....even if the mortgage crisis ended today.

Its obvious that the banks are still using their outdated, rigid, policies for dealing with this crisis, and the little people within the various departments dont have sufficient authority to handle the problem locally on a case by case basis.

[JDPriestly]

19. You are correct to some extent, however, it is also true that

our economy is being dismantled. And of all countries, those that have the most to gain from our being dismantled are China and certain countries in the Middle East that have a lot of oil and dollars. The more they own us, the more they destroy us, the less well we can maintain our military. It is our military power that these countries want to destroy.

[dmr]

67. Reminds me of a 60s recording: "... Don't attack America; wear it down gradually;"

"it'll eventually fall under the weight of its own corruption.
And did you know, it's working? ..."

I was fairly young when this was out, but the words above are the only ones I remember; and I can't tell you how many times I've thought of the above statement over the years. I had to Google it to assure myself that I didn't imagine it! Love the internet! And, now reading it, I can still hear the guy's narrative voice. As I write this, I remember one other thing: they didn't play this on the Detroit radio stations; it was played on CKLW-Windsor.

http://lyricsplayground.com/alpha/songs/d/dayfordecision.shtml
DAY FOR DECISION
(Allen N. Peltier)
Johnny Sea


Narrative:
The other day I heard someone say, "You know, America is in real trouble." It's true.
Old Glory has never fallen so close to the earth . Our embassies are being stoned.
Our diplomats are often in fear for their lives.
And we're involved in a half-dozen nameless, winless conflicts spilling American blood on foreign soil.
Our young men are dying for ideals that don't seem to mean too much to Americans anymore.

The truth is America's real trouble doesn't lie in the rice paddies of Vietnam, in the masses of Red China,
or in the diabolical intrigues to the south of us.
The real trouble lies in the playgrounds of St. Louis, the hillside mansions of San Francisco,
and in the slums of Chicago.
A disease which is slowly eating away at the heart of America lives in the small southern towns,
the fishing villages of New England, and in the hot dusty streets of the midwest.

This is the age of the American cynic. The year of the unbeliever. The day of doubt.
We've killed all the sacred cows and destroyed all the images.
And there's nothing left to respect. Old fashioned love of God, country, and family is passe.
We stare at our shoelaces when they play the national anthem.
We wouldn't want to be seen at a political rally or a town hall meeting.
And we don't want to be caught with our eyes closed during public prayers.
We've decided the only way to get into public office is to buy it.
Our heroes are the fast guys who get away with things.
Patriotism, the old hand-over-the-heart, flag-waving singing patriotism has been condemned. Think about this.
Patriotism. When you tear away the fancy phrases and crepe paper, it's plain and simple pride.
It's a new car-prettier girl-bigger house sort of pride in country. Somewhere along the way we've lost it.
Our form of government is the same. We still say America stands for the same things.
But next time you're at a party, ask someone to sing "American the Beautiful", and see what happens.

The basic ideals and structure of America haven't changed. We have. You and me. Our enemies know it.
They've seen the newsreels of the discontented marching around the capitol.
They've distorted and blown up our mistakes.
They've been putting steel wedges in the cracks in our wall of solidarity. The new idea is:
Don't attack America; wear it down gradually; it'll eventually fall under the weight of its own corruption.
And did you know, it's working?

This sneering complacency, once stamped out by the bloody feet of a tattered Continental Army in 1776,
once drowned beneath the keel of the U.S.S. Arizona in Pearl Harbor Bay, has risen again.
This deadly "Let George do it" attitude lights the way for the Viet Cong in the swampy jungles of Vietnam.
This "Better red than dead" cancer is more feared by the American soldier than all the communist mortar shells.
It kills the vitality and spirit of America. Democracy is a frail and fragile instrument.
Made of hope, prayer, and Yankee ingenuity. It is held together by a fourth-of-July flag-waving patriotism.
And we've almost exhausted our supply of it.
Try this test. Lift your eyes to a flag, then sing out as loud as you can that old out-worn antiquated freedom
hymn you learned so many years ago:

For purple mountain majesties (for purple mountain majesties)
Above the fruited plain (above the fruited plain)
America (America)
America (America)
God shed His grace on thee (God shed His grace on thee)

Now if you feel a little pride welling up inside of you, if you feel a
little mist in your eye, then, thank God for you, mister, you're still an
American!

(America, America,
God shed His grace on thee
And crown thy good with brotherhood
From sea to shining sea)

[Telly Savalas]

68. If China dismantles the US economy, where will they sell the cheap shit they manufacture?

[JDPriestly]

71. To themselves and to others in countries other than the U.S.

They would use their economic superiority in the same way that we did after WWII -- to control other countries.

[lunatica]

5. You know that monkey that sticks his hand into a hole to grab food?

Then he can't take it out again because he's holding the food, but keeps trying anyway because he's so greedy for the food that he won't abandon it? That's why

[demodonkey]

7. Aesop's Fable.

Really.

And Aesop had a lot of timeless things right, right on the money in his fables.

[redqueen]

6. Maybe they'd rather claim the loss on their taxes

and wait to sell them when the market turns around. That way they make a killing.

:shrug:

[alstephenson]

8. No - that's NOT how it's always been done.

I worked for a large bank marketing their foreclosed properties during the last real estate downturn. At that time, the banks were interested in being perceived as good corporate citizens (actually they were just protecting their ASSets). Now they don't give a damn. Also the "paper" (the mortgage) has been bought and sold and bundled with other loans so many times that the banks don't even know what they own. And in many cases it is the contractual servicer of the foreclosed loan that should be taking care of the properties; apparently they don't feel compelled or obligated to protect the value of the asset.

All of this being said, a nefarious/malicious motive may also be a likely scenario.

[thecrow]

9. Oh good. I had a Countrywide loan.

They're out of business so I must be safe. :sarcasm:

[JDPriestly]

21. If you are in California, you have a trust deed.

But in some states, you may be able to force the mortgage holder to prove they have your mortgage and own the house. Sometimes they can't thanks to the cutting and dicing and slicing that went on. See if you can talk to a lawyer immediately upon receiving a letter saying that you are delinquent on your mortgage. Call the bar association in your state to find out whether the lawyers you might deal with are in good standing from an ethical point of view. Call around to see if someone will give you a little free time. You may or may not have a case. Depends on the facts.

I just read that in California a number of lawyers are being investigated for taking advantage of homeowners facing or in foreclosure. Watch out, but do ask questions.

[On the Road]

11. I Think a Lot of Decisions by Mortgage Holders are Perverse

for exactly the reasons you state. There is, however, another side to it.

First, if the tenants are not paying the mortgage, how would they pay rent and how would the banks develop the capability to manage the properties as landlords? It's a much bigger proposition than collecting a mortgage payment. Property managers usually charge 10% and are often negligent.

Second, the mortgages are based on deposits or other assets which cost the banks interest and administrative costs. Holding an unpaid mortgage indefinitely is not free.

Third -- and this is really the key -- not foreclosing takes away from banks the power to force payment on the mortgage. Once owners are not faced with foreclosure, late payments and nonperforming loans will skyrocket. It is not just confined to the people currently delinquent. A large number people will play the system as far as it will allow them.

I suspect you are a responsible person and assume most homeowners are, too. My perception has changed in the last six years after becoming a landlord. Probably 80% of people who fall behind on their rent never catch up. Ever. And the losses suffered by allowing extensions and making payment arrangements are worse than evicting and taking an immediate loss. I know because I go out of my way to accommodate people and have cumulatively lost many thousands of dollars as a result and almost lost some of my own houses. Several times I have had tenants who supposedly couldn't pay the rent purchase large-screen TVs that I wasn't buying for myself because I didn't think I could afford it. It may be a stereotype, but it happens.

It is a very different point of view. Do not assume that the banks don't know what they're doing. Many, many people respond to leniency by taking advantage of it. If only one out of five delinquent homeowners do this, it would be catastrophic.

Now, having said that, I agree that a lot of foreclosure policies are perverse and destructive to everyone, especially in the last couple of years. What works in an up market does not work in a collapse. For example, I think that for homeowners who have a good amount of positive equity and a good payment record, banks should consider taking the mortgage out of the equity for a limited time. It might help some people avoid losing their homes and save banks the loss of a foreclosure sale.

People who work in mortgage collections are usually rule-bound and not very empathetic. But unfortunately, those personalities tend to be more successful than those who are more accommodating and lenient. It is a quandary.

[DainBramaged]

14. Good points, but looking at how giant swaths of properties

all over the country have been reduced to rubble by scavengers, and how the banks and mortgage holders aren't even trying to sell these properties let alone rent them, boggles my mind.

Two years ago, the small house I rented was foreclosed. I did not even get the opportunity to assume the mortgage. I was given 30 days notice by the Sheriff to evict in the name of some mortgage company I never even heard of. Apparently the landlord had been taking my rent and used it to buy a house in Texas, where he moved, and basically abandoned the house I lived in. The mortgage company had NO interest in selling me the house let alone renting it from them.


The house sits empty as we speak. Over 15 months. it is valued in the tax records at $235,000. Never a for sale sign up, no representation or listing by a broker. It sits in a very nice neighborhood, so there hasn't been any vandalism, but it is empty.

It boggles my mind.

[On the Road]

17. That Kind of Thing Does Boggle the Mind

and it's ridiculous if you would have been glad to assume the mortgage. Everybody lost.

Don't assume the bank never tried to sell it, though. They rarely put out signs for foreclosed properties. It may have already sold at auction and the new owner is sitting on it, waiting to renovate and flip.

There have got to be better ways to do things. It is just a little more difficult to write regulation or adopt business practices that will solve these problems without incurring new ones.

[Fire1]

47. There's one little problem with your suggestion to the banks.

"for homeowners who have a good amount of positive equity and a good payment record, banks should consider taking the mortgage out of the equity for a limited time." That would be fantastic, IF homeowners HAD any equity. Most mortgages are upside down and any equity is GONE!

[On the Road]

50. About a Quarter of Mortgages are Upside-Down

and about a quarter are owned free and clear. That leaves a little less than half with at least some positive equity.

Of course, now that you mention it, there's no reason that it couldn't be practiced for upside-down mortgages. The same principles apply,

[Fire1]

70. Deutsche bank predicts nearly half of all mortgaged properties

will be upside down by 2011. In 8/09 the Real Estate Consumer news reported 32.2% of all properties were upside down. I'm sure it's more by now. According to the Corelogic report an additional 2.5 million mortgaged properties are approaching negative equity and negative or near negative equity properties account for 38% of all properties with a mortgage.



http://www.thetruthaboutmortgage.com/nearly-half-of-mortgages-will-be-underwater-by-2011/#http://www.thetruthaboutmortgage.com/nearly-half-of-mortgages-will-be-underwater-by-2011/#http://www.thetruthaboutmortgage.com/nearly-half-of-mortgages-will-be-underwater-by-2011/#

[AllentownJake]

13. Because if they stop foreclosing

Everyone will stop paying to renegotiate their loans to the current values of the homes. If that happens all the banks will go bankrupt. It really is that simple. It is called moral hazard. It is the reason why the bank bailout is so awful in my opinion.

We are in a race to the bottom. This is what happens when you inflate the value of a capital asset than allow debt to be taken out of it.

[JDPriestly]

22. We are in a race to the bottom and have been since 1968.

That is how far back it goes.

See Michael Moore's Capitalism: A Love Story.

It is not an upper. It is the story of the race to the bottom looking primarily at the bottom. We have nowhere to go from here but up.

[RagAss]

32. Yes true....the money allowed for debt taken out was make-believe.

[AllentownJake]

34. That is why they are so worried about deflation right now

Most of the money is make believe.

[Fire1]

51. Don't be fooled by that scam. Banks are not renegotiating

that many loans. I think the latest figure I heard thrown out was 320,000 such loans that have been successfully renegotiated and I, personally, don't buy it. I don't think they've renegotiated nearly that many.

[BillDU]

15. Why?

Because the borrowers who took out the loan under written conditions were unable to continue paying for it.

[DainBramaged]

16. You completely missed the point but that's OK, it isn't about the borrowers

:think:

[BillDU]

24. I disagree

Baloney!
I hit the nail on the head.

[DainBramaged]

25. Really, you think you did huh?

We're talking about

H-O-W T-H-E M-O-R-T-G-A-G-E C-O-M-P-A-N-I-E-S A-R-E N-O-T T-R-Y-I-N-G T-O M-O-V-E T-H-E P-R-O-P-E-R-T-I-E-S T-H-E-Y F-O-R-C-L-O-S-E-D O-N N-O-T T-H-E R-E-A-SO-N T-H-EY W-E-R-E F-O-R-C-L-O-S-E-D F-O-R.

you think the people were all bums? Or maybe predatory lending practices and lack of oversight along with unscrupulous realtors contributed to the problem?

nah, you just think its the fault of the borrowers don't ya?

[BillDU]

26. Yes

Yes. I think they signed a legal contract and are bound legally by the terms of that contract.


You say:

"We're talking about

H-O-W T-H-E M-O-R-T-G-A-G-E C-O-M-P-A-N-I-E-S A-R-E N-O-T T-R-Y-I-N-G T-O M-O-V-E T-H-E P-R-O-P-E-R-T-I-E-S T-H-E-Y F-O-R-C-L-O-S-E-D O-N N-O-T T-H-E R-E-A-SO-N T-H-EY W-E-R-E F-O-R-C-L-O-S-E-D F-O-R."

However your original post question was:

"I'd like to know WHY all of the homes are being foreclosed, what's in it for the banks"

I answered your original question which was what the post was supposed to be about.

What if a bank legally agreed to a contract to lend a borrower for $100,000.00, and then only gave the borrower $5,000.00?
That would stink!
Same thing in reverse.

[DainBramaged]

28. Nope, you're blaming the homeowners, I know the pattern here

Sorry you've taken the entire post so literally. everyone else understood.

BTW, are you a fan of Alan Grayson, you know the Congressman who called the Pukes knuckle-dragging Neanderthals?

[BillDU]

30. Grayson?

I wouldn't say I'm a fan of his however I do admire his spunk and posturing.

[DainBramaged]

31. Spunk and posturing?

You think the guy is posturing? Like Reich-wing scum Hannity, Lush Limpballs, Beck, Man-Coulter, Screaming Mark Levin, lying Eric Cantor, Laura 'I hate everybody' Ingraham, like them? Shall I go on? Those scumbags posture, Grayson is a hero, I guess you don't know much about his past?

[BillDU]

33. Grayson again

I said I admire Grayson for his recent utterances.
The home owners are lucky.
They borrowed money from the Banks.
If they borrowed money from the mob,
well, it would be much worse.

[DainBramaged]

36. Really, you think people who were sold on jumbo loans by unscrupulous Realtors

who 'recommend' lenders (from which they got a piece of the loan)and TOLD the people who wanted to buy the houses don't worry, the market can only go up up up, especially people who NEVER owned a home (first time buyers) who were pushed into no-proof income loans JUST to get the commission (especially in areas where the borrowers were Black or Hispanic) you really think these people were to blame, and that they were lucky NOT to have borrowed from the Mob?

What a screwed up opinion. You are clueless about the collapse of the housing bubble, aren't you?

5.4 million American homeowners–yes your neighbors, brothers and friends–with a mortgage were either behind in their payments or already in foreclosure at the end of 2008 according to the Mortgage Bankers Association. That’s almost 12.4% folks. Swallow your sandwich before you hurl. It’s really that bad.

That compiles to one in eight households with mortgages. Please take a moment to process this data.


http://blog.loanzen.com/2009/03/05/mortgage-delinquency-data-points/


These were also people WHO WERE LAID OFF AND DIDN'T HAVE THE MONEY TO PAY THEIR MORTGAGES. DO you understand that little segment of the recession? Oh wait, you're working and own your house, you're smart....

[BillDU]

40. Borrower Beware

I disagree that it is a screwed up opinion.
Yes I do think people are responsible for their actions, and yes I do think they are lucky they didn't borrow the money from the mob.
For that much money, it wouldn't be the house that was foreclosed on.
No I'm not clueless about the collapse of the housing bubble. I foresaw it. I might have bought a house and flipped it in those days however I was new to the idea and didn't really know enough to venture in. So seeing the collapse of the housing bubble was imminent I understood I wouldn't have enough time to learn so I crappered the idea.
Buyer beware!
Borrower beware!
Do your homework.
It helps.

[DainBramaged]

42. Your attitude reminds me of people I've known here and in real life

It is ALWAYS the fault of the person who dips their tow in, never the possibility that they were led astray. And they don't think too progressively either. You also seem to have a fascination with the Mob. hmmmmmmmmm


So sad.......

[BillDU]

43. OK

I think at this point, I've said, and , you've said enough so people can see the difference.
I stand by what I said.
Wish you well.
Good Bye.

[DainBramaged]

44. Yes, people here can see the difference between us.

Ta ta.

[Cessna Invesco Palin]

66. What the fuck does "dips their tow in" mean? n/t

[Fire1]

53. Hard to take the moral high ground after you managed to get

your profit from the over priced property you flipped.

[BillDU]

55. Clear

I wasn't even considering the moral high ground.
Knives can either kill or heal.
The profits from a flip can either kill or heal.
It's up to you.

[ms.smiler]

27. Here are my thoughts

I've been reading about this subject and I certainly don't fully understand securitization and credit default swaps.

Given what I've read though it seems that mortgages are insured, perhaps 20 or 30 times the original amount. If this insurance exists, perhaps known as the "credit default swaps" the banks make more money when loans default than when they are repaid.

If this is true, the banks have a serious monetary interest in the failure of our economy, job losses, company closings, and ultimately homeowners defaulting on their mortgages.

I've viewed Wall Street as the enemy of Main Street for some time, but this is unconscionable if true.

The banks don't appear to really want or value the property they foreclose as they will permit the structures to decay. This makes sense if they already made the real money in another fashion.

This fits with banks jerking homeowners around over modifying home loans while they're actually busy foreclosing. On the rare occasions they do modify a loan, they include language that denies the homeowner the right to sue for missing paperwork or errors in the loan.

[DainBramaged]

29. Mortgage insurance is a MUST n NJ if you buy a house

So that the holder gets paid when the property is foreclosed. You've made a great point, I forgot all about that. For the first 10 years of my original mortgage on my first house, I paid insurance, and it wasn't cheap, around $100 a month.

[flvegan]

35. In it for the banks? Massive losses.

Banks profit/break even on a foreclosure VERY rarely. Here in Florida, a foreclosure will cost a lender (that is the successful bidder) a loss of anywhere from $20k to ???? every single time.

[quiller4]

37. There is nothing to prevent a bank from turning a foreclosed

property into a rental property. Foreclosing doesn't have to mean keeping a property vacant.

[DainBramaged]

38. my point, but it appears they haven't anywhere.

The home I wanted to buy I was living in, empty. I could have easily paid the $1320 a month mortgage (complete with insurance and taxes)since I was paying $1100 rent without my room mate. But, it sits empty, generating zero income for anyone.

[Hannah Bell]

61. blue-sky: could be they want to keep some properties off the market to push up rental rates in the

remainder.

1. could be they want to economically tank your area.

i once read a piece on detroit where some big capital was buying up foreclosed property. but they were just letting it go to hell, keeping it open for drug dealers, etc. it "turned" neighborhoods, people started to want to sell, they bought that property & let it go to hell too.

[quiller4]

77. There are quite a few foreclosed homes owned by Chase in

this area that are rentals now and several big condo projects that are bank owned are being offered for rent. I think it varies from one part of the country to another. Since vacacy rates are quite low in this area, it pays a bank to contract with a property management firm and convert properties to rentals.

[Fla_Democrat]

41. Because banks

are not in the landlord business. If they start renting out the homes, instead of receiving the mortgage payments, they are subject to the landlord tenant laws of the state. Plus they are responsible for the 'wear and tear' associated with occupied dwellings. I don't see Johnny Branchmanager getting up at 3am to go fix an AC or unstop a toilet.

[Hannah Bell]

62. they contract to property management services. at least here.

[Yo_Mama]

48. There is a proverb in the mortgage servicing industry

Your first loss is usually your best loss. (Best meaning lowest.) Unfortunately, it is generally true.

You have to understand that if the person isn't paying their mortgage, they almost certainly aren't paying the taxes or insurance either (definitely not if there is escrow, probably not if there isn't and there isn't much homeowner equity there). Okay, so that means that paying property insurance and taxes is something that the creditor has to do ANYWAY, and why on earth would they do it while the homeowner is receiving free rent? Servicer contracts generally require the servicer to advance that money. They get it back after the foreclosure, but it certainly gives the servicer an incentive to move the process along - either modify or foreclose.

Nor can they usually rent the home unless they foreclose. Some creditors are trying hard to allow renters to stay in the foreclosed home, but not owners. A mad, disgusted erstwhile owner is probably the worst possible tenant. And if a creditor writes down the mortgage so that it is more payable, you are just signaling everyone that it is a great tactic to stop paying the mortgage. So that is not going to happen very often.

The way the decision is usually made is a bit complex, and can vary from servicer to servicer. Normally it involves an Net Present Value calculation if a modification is even being considered. An NPV balances the expected net recovery after foreclosure and all expenses against the present value of the future payment streams being contemplated in modification.

But you have to understand several things. The first is that if creditors generally didn't foreclose, the number of mortgage defaults would skyrocket. The second is that if the mortgage is not being paid, the home may be being trashed and/or neglected. Therefore the eventual loss would be much worse. If you let a person who is going to lose the home keep it for too long, the home will not be maintained, no one will be doing maintenance, and with each month that goes by the odds are that the home value is depreciating - even when average home values in the area are rising normally. This is even more true when home values are dropping. Since it can take six months to 2 years (PA) to foreclose, delaying the start of the proceeding can really stretch your maximum risk period out. You might be surprised to know that many delinquent mortgages do manage to get current during foreclosure proceedings. Usually it is at least 20-30%, but it varies based on area, type and economic conditions.

Most of the big servicers have imposed several months of foreclosure hiatuses over the last year. The results have been poor - most of the defaults don't cure and don't sell, and on average when the foreclosure proceeds the home has devalued more so the loss to the creditor is higher.

If the homeowner has real equity in the home, the odds of a successful modification are quite high if the default is due to some temporary condition. The missing payments are usually capitalized and stuck on the end of the mortgage.

If the homeowner doesn't have real equity in the home, and the homeowner defaulted relatively early in the loan basically because the homeowner is stretched in finances, the odds that a modification will be successful over the long term are very poor, but the odds that the home value will have declined considerably by the time you do foreclose after attempting mod are very high. This is the problem with unaffordable loans - a homeowner who doesn't have equity can't borrow for maintenance costs, and a homeowner who can barely pay the mortgage can't afford to pay maintenance costs out of pocket. Once they have gone into serious default, their credit is wrecked so they would have a hard time getting a loan anyway.

A lot of people seem to be looking at this as if it is a simple question of foreclose now and take a big loss vs modify loan and take a small loss, but that is not generally how it works. Modifications are often not successful. Over a few years at least 30% of them will fail if the homeowner has equity, and if the homeowner doesn't have significant equity over 5 years or so over half of them will fail. So when you do the math, unless the borrower has a good record, meaningful equity, and you can establish that the reason for the default was temporary, modifications will often involve taking a small loss first and then a significantly bigger loss later. On average you do much better just foreclosing.

[DainBramaged]

49. Isn't a 70% recovery rate better than a 100% loss rate?

:shrug:

[Yo_Mama]

52. I get it now

You are a sorehead who wants to buy foreclosed homes for 30% instead of a person who is worried about being foreclosed on.

First, they aren't going to be taking a 100% loss. When you have a wave of foreclosures this big, the only thing to do is to roll them onto the market gradually. Even if the home turned into a teardown, there would still be some residual value in the land.

Second, even if you were taking a 100% loss it might still be worth it if you stopped another 30% of homeowners from having to default on THEIR mortgages. Because once you dump thousands of foreclosed homes on the market at once, the 30% price becomes the market price, and now homeowners who are paying their mortgages perfectly happily are suddenly so far underwater that they can never get out, and will eventually have to default on their own homes.

It is never worth it to dump it all on the market all at once. By slowly rolling them out over a period of years, you prevent prices from falling so far that it creates an unnecessary wave of defaults. And it pays for itself.

[DainBramaged]

54. You completely misunderstood my response, but that's Ok

I live in an apartment, I no longer care about mowing lawns, fixing pipes or painting shingles.

I am way too old to get a mortgage anyway. I was serious about my point, and it looks like you are way to serious about yours. Sorry I don't work in the industry.

BTW, I do own a house, it's for sale, it was my Mom's. I grew up in it. I own it outright, no strings. It is for sale. And when it sells, my beautiful Daughter will get most of the proceeds from it. But I feel sorry for the people who were fucked by the scumbags who turned a quick buck on their hopes and dreams and put them right back into poverty and destroyed credit so they could foreclose on the property and reduce their losses. Those same fuckwads who we bailed out to the tune of TRILLIONS of dollars.

Goodnight.

[Yo_Mama]

56. Alright, sorry

I did misread you, and it was because you were talking about a 100% loss. I did not believe then you were serious; I thought you were a shark, and sharks are evil. They specialize in combination with bad brokers in basically destroying neighborhoods, buying up homes very cheaply, and then rolling everything over for a fat, fat profit. In the meantime, ordinary homeowners get crushed.

Just because the banks aren't dumping these all on the market at once doesn't mean they won't eventually be sold. No way is there a 100% loss there.

They'll be sold except for some of the partly built stuff. But common sense and long experience tell creditors that you have to do it over a while to let the market absorb the homes. As each wave of homes are sold, realtors and companies will be hired to fix up what they can to get the best price.

And it is not fair to homeowners who have not defaulted to crush the market. You can't keep prices out of line with market fundamentals by slowly selling the inventory, but you can prevent the market from being crushed below market fundamentals by a flood of excess homes.

The Fed is buying mortgage bonds in order to keep the GSE mortgage rates artificially low so that prices can be somewhat supported. To an extent, I think they are overshooting and being unrealistic. However, foreclosures are generally selling well (even if for drastically lower prices than those of a few years ago) even in markets with a lot of vacant homes. It is homeowners who need to sell who are being locked out of the market.

[EmeraldCityGrl]

57. Just wanted add...

The rules that worked for years no longer seem to apply. It seems the banks are doing business the way they have for years under extraordinary
market conditions. Something has to change or we will all continue to lose, the banks, the homeowners, the prospective buyers.

[me b zola]

59. Re-distribution (or continued distribution) of wealth to the wealthy

[Festivito]

60. The Fed picks up the land they will someday rent back to us. /nt

[bridgit]

64. I think to an investor class of E-trade babies that 'irrational exuberance thing' was an easy sell

The commercial paper that came down as a result of bundling otherwise operationally-disparate financial services and products, which some Dems supported, said to them 'Come on! Buy it! No money down, no credit check required, no ref's, no job necessary just flip it and make more money own multiple listings; all you need is to have faith in what *you* do' - well - if frogs had wings, right? I suppose they want us to believe the system just snapped one day like a bent willow twig and maybe that's true

Still the great ebb & flow of huge money kept flowing in from hedge/sovereign funds, old dark money, private lenders predatory lenders and such, all coming together pumping America's consumer driven econo at least the one before many of these same people sent American jobs all round the world while driving up prices here and suppressing a stable living wage: people that knew completely well they had no intention of taking any greater risk than their equation could account for, people that live and plan long range by the adage:

"Give me control of a nation's money supply, and I care not who makes its laws." The inclusion, "Neither do I care for such a nation's people." seems easy to conclude as well and so the domino's began to fall. Down here where we are, we lose our homes our shelter our warmth our facilities...up there where they are they're just making an adjustment

Small fish underwriters they get caught up in a spinning turbine blade and die, others get absorbed or enter some 'chapter status' limping along maybe they'll survive maybe not, hostile takeovers, mergers, value/stocks manipulated wantonly, lobbyists with shiny teeth bigger than their faces; but the people at the top? Not our cheesy little top 1%er's, but the tippy top? They started calling in their markers. They shut a few values opened other ones and their money began to flow over there wherever that is

Heard a UAE prince had some bucks in CitiBank and boy was he upset about it not returning as represented; he got redress. And I know you see whose been receiving redress all along. I do think it's been going on since well before Charles Dickens. Why, I bet it's the world's 2nd oldest profession: money lending, right behind prostitution. And I think that's why certain scripture mentions taking usury profits as, well, usury; and so thought less than moral which of course it is

If only moral q's were in their equation ~

Reading into your OP seeing the "Chinese", not the, you know, Chinese per se as the problem here but China as a visual sweep of humanity. Vast multitudes flowing through equally vast landscapes damming great rivers and building stuff, rushing in at the wave of a finger changing out courtyards brimming with golden flowers with new when but a sample becomes offensive to the eye and I thought, but for the murderous castle intrigue; how easy it would be to bring a people to heel by throttling their access to exchange and commodities

Americans are being brought to heel shock doctrine style but stupid? The little money lender guys sure, people that bought into it, we were all too stupid in the aggregate

The smart ones always seem smart enough to leave a big bag of money next to a fake ID in an idling speedboat and they're gone soon over the horizon

[AntiFascist]

65. Have you noticed the number of banks failing because of the mortgage crisis?

With less competition, more wealth is concentrated into the hands of a few.

[HamdenRice]

69. Robots: Because when mortgages are securitized, there is no "bank" to work with the homeowner

This is one reason that creating mortgage backed securities made the problem so much worse.

Your assumptions are fundamentally correct. Back in the old days, local banks would often work with homeowners to restructure loans so that the homeowner stayed in the home and the bank eventually got paid.

The system of "securitization" of mortgages involves the original bank or mortgage company selling the mortgage to a stand alone company (actually never a real company but almost always a trust). The trust holds thousands of mortgages and then sells bonds, mortgage backed securities, against the mortgages. The owner of the mortgages is now not a bank, but a trustee. The trustee hires yet another company to collect the house payments, a company called a "servicer".

Investors would only buy these bonds if they behave predictably. So the terms of the trust and service agreement have written in them very rigid rules that tell when the homeowner has to be foreclosed on. The trustee and servicer are very remote from the homeowner compared to the local bank. They act like robots in these matters. Obviously they did not predict a country wide real estate meltdown and so their "predictable" models ended up being all wrong.

But the entire system of mortgages held by mortgage backed security trustees continues to operate like robots that the banks instructed how to behave and that can't now be reprogrammed.

[EmeraldCityGrl]

73. It's much more calculated than this.

Banks are holding on to foreclosed properties (unreported) in an effort to keep their balance sheets within government windows.

[earth mom]

74. Why does this thread have so few recs? Worried that this reflects badly on Obama?

Well yeah, it does as a matter of fact.

Obama has done very little to help the people this past year-yeah it's been almost a whole damn year, and very little has changed except MORE people are out of their homes & jobs. :grr:

[DainBramaged]

75. It's me too, I am not a 'favorite son' on DU, not by a long-shot

nor a member of any clique. I just do my thing, contribute most every drive, and try to so some things to keep the bad guys from overrunning us. I'll put up a happy thread and there are jerks that will unrec it just because.

[BlooInBloo]

79. lol! Now simply being on the greatest isn't enough for you people.

:rofl:

[earth mom]

82. "You People" eh? Who's side are YOU on anyway?

Very telling-your post. Very telling.

[ms.smiler]

80. I found a partial explanation that I think is helpful

This is from a Blog I've been reading lately and the explanation fits with all else that I've read. I'm still trying to understand matters better on the homeowner/foreclosure side of this since reading about some type of "double dipping" related to securities. Often, when a mortgage goes bad, another company will buy it and it doesn't make sense to purchase a nonperforming mortgage unless there's money in it somewhere. The foreclosing company gets some type of compensation or insurance in addition to the home which is supposedly illegal I think because of laws related to securities. There certainly seems to be lots of money in this scheme and plenty of fraud.



Passing Notes

When you purchase a home with a mortgage, you sign a note. The loan-originating company sells the note to an investment banker or hedge fund and collects the full value of the note upfront. A copy of your note is created and stamped “paid in full.” The loan-originating company has no right to foreclose because it received all its money when it sold the note.

Before greed took control of the market, the holder of the note (i.e., an investment banker) would store the note in a vault. If someone defaulted on their loan, the investment bankers would produce the note to prove they owned it and that they had bought it from the loan-originating company.

But greed changed all that.

Instead of vaulting the original note, those notes were “re-packaged” with thousands of other notes into what became known as CDOs. There were low-risk CDO mortgage packages, moderate-risk CDO mortgage packages and high-risk CDO mortgage packages. The low-risk mortgage packages were easy to sell to conservative investors looking for long-term income. Most of those original packages are still valid and producing income.

However, the moderate-risk and high risk-mortgages were not easy to sell. To resolve this, these mortgages were re-packaged by mixing them with low-risk mortgages, and sold to conservative investors. The same mortgage could have been re-packaged and sold a dozen times.

Remember, the investment banker paid only one time for the instrument and only has the right to place the note in one package. Repackaging was a highly illegal use of mortgages. In order to hide the trail of their activities, investment bankers destroyed the notes so no one could trace which CDO packages the note was actually put in. But since the notes are destroyed, ownership is difficult to establish.

Who Really Owns Your Loan?

When borrowers default on their loans, investment bankers want to foreclose quickly so they can retain some value to their mutual funds. They quickly sell the mortgage to a foreclosure bank. They can’t sell the note because it was destroyed. This leaves the foreclosure bank vulnerable because it does not have proof that it owns the note.

Remember, the only thing that the borrower signed is a note. The borrower did not sign the right to repackage the mortgage. The only asset is the note that represents the actual property. And even though the investment banker has a record of monthly payments that he sells to the foreclosure bank, this may not be sufficient to establish actual ownership.

When a borrower is foreclosed upon, the foreclosure represents a lawsuit. The foreclosure bank brings a lawsuit against the borrower for failure to pay. The bank is the plaintiff and the borrower is the defendant. Since the borrower is the defendant, he has the right to call for “discovery.” Discovery is the pre-trial litigation procedure in which both the plaintiff and defendant request relevant information and documents from each other. Discovery generally includes depositions, requests for inspection and document production. In the case of foreclosure, the defendant requires the plaintiff to produce the note.

The problem for the foreclosing bank is either it does not have the note at all because it was destroyed to stop the audit trail, or it says “paid in full” — in which case, nothing is owed to the bank.



Given all I've been reading, these companies are bluffing their way through foreclosures on homeowners across the country. I still have to research though so I can better understand the money made on the foreclosure side.

[ms.smiler]

81. A complicated thing called Credit Enhancements

which sounds to me much like insurance, is required by law inside a securitized mortgage loan trust. The loan trust pays benefits upon declaration of mortgage default. The problem is, companies may take that Credit Enhancement and also foreclose.

http://www.fourwinds10.com/siterun_data/government/judicial_and_courts/news.php?q=1253641700

From the article:

Deutsche Bank was also the subject of a recent ruling in a case in New York where the Court denied Deutsche Bank’s Motion for Summary Judgment, finding that a purported assignment from MERS to Deutsche Bank was defective and that Deutsche Bank, with an invalid assignment of the mortgage and note from MERS, lacked standing to foreclose. Significant in the ruling was the court’s observation and question as to why, 142 days after the borrower was claimed to be in default, that MERS would assign a “toxic” loan to Deutsche Bank. The court also required a satisfactory explanation, by sworn Affidavit, from an officer of the securitized trust as to why, in the middle of “our national subprime mortgage financial crisis”, Deutsche Bank would purchase from MERS, as alleged “nominee”, a nonperforming loan. The court further inquired as to whether Deutsche Bank violated a corporate fiduciary duty to the note holders of the securitized mortgage loan trust with the purchase of a loan that had defaulted 142 days prior to its assignment from MERS to the trust.

It appears that Deutsche Bank may have done so to take advantage of one or more “credit enhancements” inside of the securitized mortgage loan trust which pay benefits upon declaration of default. These credit enhancements are extremely complicated and multi-layered, and are required by law in connection with the issuance and sale of the mortgage-backed securities “backed” by the trust.

The assignment of the mortgage and note to the securitized trust, which were already in default well in advance of the assignment, would permit Deutsche Bank to both realize a profit through payment of credit enhancement benefits (which effect a pay down of the claimed “default”) while simultaneously permitting Deutsche Bank to institute a foreclosure, resulting in a “double dip” for Deutsche Bank. This is, of course, illegal, but unless competent counsel raises the issue, it goes unnoticed and Deutsche Bank, like so many other foreclosing parties, winds up stealing the borrowers’ property and getting paid for doing it.


Exactly how many ways can banksters scam Americans?

[dysfunctional press]

83. it's kind of like what happened to a lot of farmers in the 70's...

the ruling class can never go wrong owning most of the real estate.

just ask mr. potter.

[Scout]

84. i don't know why the banks are doing it....

but i know several couples who "let" it happen to them basically on purpose because it was to their advantage now to back out of their agreement.